Virgin Galactic has signed a deal with the state of New Mexico to build the world's first commercial spaceport in the US. 

The $200m project will cover 27 square miles, including a mission control station, runways and the Virgin Galactic headquarters. Much of the facility will be built underground to minimise the visible environmental impact.

"New Mexico has worked hard to bring us to its exciting new spaceport facility," stated Will Whitehorn, president of Virgin Galactic.

"The state has several factors that make it an ideal operations base: climate, free airspace, low population density, high altitude and stunning scenery.

"We look forward to working together to make the 'final frontier' a reality for tens of thousands of pioneering space tourists."

Virgin Galactic is a joint venture between Sir Richard Branson and Burt Rutan, who won the X-Prize with his company Scaled Composites for successfully launching into space twice with a reusable vehicle. Paul Allen, co-founder of Microsoft, is also a major investor. 

The group hopes to have the first paying customers in orbit by 2008 and 75 people have already paid the $200,000 price for a trip into space.

Passengers will spend under 10 minutes in space at an altitude of 70 miles, high enough to experience free fall and see the curvature of the earth.